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With time running out to meet a pledge to complete the legal framework for an EU-wide banking union by the end of the year, Germany's Wolfgang Schäuble told a meeting of finance ministers he could not support a plan that would give the ECB's Governing Council the final say on supervision.
France's Pierre Moscovici and the ECB protested against any watering down of a plan central to Europe's response to a five-year banking crisis and which promises to unify the way it deals with problem banks, ending a previously haphazard approach. "The right of the last decision cannot be left to the ECB Governing Council", Schäuble said in comments broadcast to reporters, going on to say that allowing it to happen could obscure the ECB's primary monetary policy mandate.
There could be no deal unless national supervisors had responsibility for most banks, he added, dampening expectations of a quick agreement on what will be a cornerstone of the closer integration needed to secure the euro's future. "A Chinese wall between banking supervision and monetary policy is an absolute necessity", he said, also voicing scepticism that an independent central bank such as the ECB could even take on the tasks of supervision.
Moscovici countered that EU leaders, who had given finance ministers responsibility for drawing up a supervisory framework, had placed the ECB at the centre of their vision. "We have no mandate for a dual system of supervision, which would call into question the existence of a single system for some banks", said Moscovici, conceding after the meeting that their differences were difficult to hide.
Austria's Maria Fekter said that EU leaders, in making their pledge to establish a new system of supervision, "did not decide the hegemony of the ECB, just involving the ECB", and accused [the ECB's] Constancio of misrepresenting their intentions. The suggestion was rebutted by Constancio. "It is inside the ECB, as the summit has decided", he said, although Schäuble also questioned that reading of the leaders' June decisions, which called for the ECB to be given overriding oversight.